Lessons learned from our FTTH pilot in France
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1 Lessons learned from our FTTH pilot in France Paul-François Fournier senior VP, advanced products and services marketing NExT agenda 1 what we have learned from our customer pilot marketing orientations for 007
2 agenda 1 what we have learned from our customer pilot marketing orientations for more bandwidth for more services HDTV with interactive programs, on multiple TV sets or PCs VOD movies and programs streaming or download video games on-line or download video blogs / online photos for digital cameras and camcorders online storage and back-up data security for consumers and SoHo's simultaneous and symmetrical usage powered by the livebox (eg peer to peer TV) 4 Orange role is to meet customer demand beyond what ADSL-type solutions can provide, for mass market take-off in 009
3 customer keep asking for more bandwidth Coverage DSL ADSL / ADSL+ VDSL FTTH < 0 Mbps 50 Mbps 50+ Mbps we chose FTTH as it is the most upward scalable, therefore future proof, solution which architecture should we use? 1 st customer point to multipoint 1 fiber for 64 customers 64 th customer point to point 1 fiber for 1 customer point to multipoint (on GPON) is the most CAPEX efficient (lower duct occupancy with less fiber) and saves OPEX at the central office there is no foreseeable limit in available bandwidth. 6
4 customer pilot began June 1st cities in the Hauts-de-Seine Asnières-sur-Seine Boulogne-Billancourt Issy-les-Moulineaux Rueil-Malmaison Villeneuve-La-Garenne 6 districts in Paris 3rd, 4th, 6th, 7th, 13th, 16th all-included offer 100 Mbps symmetrical Internet access simultaneously HDTV streams on TV and 1 stream on PC unlimited VoIP dedicated Web.0 portal on-site home installation and services activation dedicated hotline 70 / month homes passed 650 agreements with managing agents for collective buildings ( syndics ) 500 customers (5% penetration) km fiber installed less than 5 m CAPEX 7 lessons learned from our 006 pilot customers high level of interest for FTTH symmetrical bandwidth and reliability, with technical support required for mass market adoption main applications are : HDTV, multi-access, photos, video, home working, sharing of user generated content 70% of customers own or more TV sets 30% of customers own a HDTV set roll-out key parameters are : lead time to get agreements from syndics lead time to connect and install customers on-site pilot helped define end-to-end roll-out processes in various habitations (old or recent apartment buildings, detached houses) several months to get agreement with syndics between 4 and 1 hours for on-site home connection and service activation technology our technology choices (GPON, FTTH livebox) proved effective we learned how to best leverage our working relationships with industrial partners first consumer box to have been upgraded for 100 Mbps symmetrical throughput France Telecom is 1st major incumbent to deploy GPON 8 deploying a FTTH infrastructure takes time, resources, and the skills of a fixed local loop operator
5 pilot helped us to accurately assess our cost structure 15% network and optical infrastructure 5% 10% 10% 60% customer connection customer premise equipment home installation customer acquisition, relationships with "syndics", service provisioning for a 10% penetration rate (subscribers / home passed) we have launched action plans to reduce these costs for most efficient deployment 9 what we have learned from advanced countries USA fixed operators respond with fiber to cable predominance, and to customer demand for HDTV FTTH PON is the architecture chosen by Verizon ( 500 K customers by 3Q06) and AT&T JAPAN main lever is bandwidth : Internet remains the killer application mid-006, 3 M FTTH / PON-based customers installed very high speed access is gradually taking off throughout the world, mainly by means of FTTH PON 10 Sources: Idate, Infocom, 006
6 agenda 1 what we have learned from our customer pilot marketing orientations for pricing will improve value for money objective: achieve adequate consumer ARPU option 1 option premium offer basic offer entry level pricing will serve as a bridge between current DSL triple play offers and FTTH, therefore enticing DSL customers to migrate to FTTH pricing structure will include options (such as multi-stream TV, content offers, online data back-up and storage, etc.), thereby bolstering consumer spending 1 balancing FTTH penetration with FTTH ARPU, while providing consumers with better value for money
7 007 new services to enhance customer experience today s services up to 100 Mbps symmetric Internet Web.0 portal including TV over PC multi-stream TV High Definition TV and PVR 007 evolutions High Definition Communication (voice and video) sharing of User Generated Content personal Broadcast gaming security : online storage and back-up convergent services 13 summary demand for very high speed access is emerging, and will achieve mass market status in 009 we have started to industrialize our roll-out processes our selected technology is mature (GPON, FTTH livebox) our pricing approach in 007 will facilitate migration from ADSL while protecting long-term ARPU potential new services to be launched in 007 will further improve customer experience with FTTH 006 pilot has been successfully completed and paves the way for the next phase to begin in
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